* Oil falls towards $61/bbl after N.Korea nuclear test
* North Korea says conducted nuclear test
* OPEC likely to maintain output targets next week
(Updates prices, adds analyst comments)
By Fayen Wong
PERTH, May 25 (Reuters) - Oil prices fell towards $61 a
barrel on Monday, shedding some of the previous session's
gains, on risk aversion after North Korea said it had conducted
an underground nuclear test.
Still, prices hovered around a six-month high, as a weak
U.S. dollar and expectations the Organization of the Petroleum
Exporting Countries (OPEC) would keep its official production
targets unchanged during its meeting on Thursday limited oil's
losses.
U.S. crude futures for July delivery <CLc1> fell 29 cents
to $61.38 a barrel by 0729 GMT. The contract settled up 62
cents at $61.67 a barrel on Friday, boosted by data showing a
big increase in Chinese demand, along with a weak dollar.
London Brent crude <LCOc1> fell 38 cents to $60.40.
U.S. markets are closed on Monday for the Memorial Day
holiday. NYMEX floor trading resumes on Tuesday.
"There is a short-term kneejerk negative impact on oil
prices but the impact will be quite limited since the two
Koreas are not suppliers of oil, so there won't be any
disruptions to supply," said Victor Shum, an analyst at Purvin
& Getz in Singapore.
North Korea conducted an underground nuclear test on
Monday, heightening tension in the economic powerhouse of East
Asia and prompting U.N. Security Council members to call an
emergency meeting []
North Korea's latest provocation, coming after what it
called a peaceful satellite launch that sent a rocket over
Japan earlier in the year, caused an initial tumble in South
Korean shares and a pull-back in higher-yielding currencies.
But this proved short-lived as market players believed
North Korea's action was another political gambit aimed at
securing concessions from major global powers. []
Analysts said a weak dollar, now languishing near its
lowest level this year, would continue to offer support to oil.
Oil prices rallied around 9.5 percent last week, boosted by
a spate of U.S. refinery problems and unrest in major oil
exporter Nigeria, and are nearly double their lows hit in
December on hopes the economic recession is easing.
Nigeria's main militant group said on Monday it had
attacked major oil pipelines in the Niger Delta to prevent five
flow stations feeding a facility operated by U.S. Chevron
<CVX.N> from operating, but there was no independent
confirmation. []
Saudi Arabian Oil Minister Ali al-Naimi said OPEC would
"probably stay the course" when it meets this week as he
forecast a pick-up in demand and prices eventually rising
towards $75 a barrel. []
Algeria's oil minister said OPEC was unlikely to cut output
at its meeting next week amid a weak global economy, warning
compliance with previous supply cuts had slipped in April and
needed to be tightened first. []
China wants to set up a 3 million tonnes reserve of oil
products this year, which is practically impossible, a
researcher at a think-tank run by the country's top oil refiner
Sinopec Group, was quoted as saying on Sunday. []
Crude oil speculators on the New York Mercantile Exchange
steeply increased net long positions in the week to May 19,
according to data from the U.S. Commodity Futures Trading
Commission released on Friday. []
(Editing by Ben Tan)
